Aclaris Therapeutics, Inc. Q1 FY2023 earnings call

Doug Manion introduced the company's pivot from dermatologic conditions to immune-inflammatory diseases via acquisition of Confluence Life Sciences and mentioned key clinical assets like ATI-450. Gail Cawkwell discussed clinical programs including ATI-2138 Phase 1 multiple ascending dose study progressing, ATI-2231 progress with academic partners, ATI-1777 Phase 2b study update with protocol amendment, enrollment, and timing change for top line results, ATI-450 HS trial details on safety and pharmacodynamics, RA trial enrollment on track, and psoriatic arthritis trial enrollment adjustment. Joe Monahan discussed pharmacokinetics and pharmacodynamics of ATI-450, consistent cytokine inhibition across studies. Kevin Balthaser talked about cash position, financial results for Q1 2023, including net loss, revenue, R&D, and G&A expenses.

No detailed breakdown of product segments by revenue contribution and absolute terms provided in the transcript.

ATI-1777 top line results timing moved to second half of 2023; RA Phase 2b trial top line results expected in Q4 2023; psoriatic arthritis trial top line results adjusted to first half of 2024; ATI-2138 Phase 1 multiple ascending dose study results expected in second half of 2023.

Clinical trial risks such as unexpected trial outcomes and enrollment challenges; market risks related to competitive landscape in immune-inflammatory diseases; risks associated with forward-looking statements and potential differences from actual results.

Q: Hi. Congratulations on all the progress this quarter and thanks for taking my question. So I wanted to ask you first on the read-through from HS to your RA study and a lot of people are anticipating results from that at the end of this year. And I'm wondering how you think about that elevated CK level, if you might see that in the RA study? And then second question I wanted to ask you was on the atopic dermatitis enrollment. And did any of that have to do with more drugs being available really just the winter season? And if you move into milder patients, how well do you think the drug will do in milder patients or what kind of efficacy have you seen in that patient population? And the last question is just on UC, how did you come to choose this as your first indication? And how quickly can you get to proof-of-concept since this market is rapidly evolving?

A: Thanks, Louise, it's Doug here. So regarding the read-through from HS to RA, not focusing on CPK, and we see nothing but positive. So we have significantly more confidence in the safety profile of the drug and there's really no red flags. I developed dozens of drugs, and it's a real luxury to have one that is looking as this one is. Obviously, we have to complete the program. But so far, it's tracking to be -- to have an extremely attractive and we think competitive safety profile. And the drug works systemically exactly as we thought as it would in HS and as it did in the RA Phase 2a. So we're very bullish in terms of what all that means in terms of the RA study that's going to read out in the fourth quarter of this year. Regarding CPK, I mean, I think Gail did a great job of kind of elaborating what we did and didn't see in the study, but -- we just need to just be cognizant, elevations of CPK are clinically irrelevant. I mean most people would not even follow these in regular clinical practice, they go up and down based on exercise, and your overall level of activity. The concern would be if there was any associated symptoms with it, muscle weakness, muscle pain, none of which we saw or if, in fact, it looked like it was a cardiac origin, and we've looked at the CK fractionation on many of these patients, and there's been no elevations of CK-MB. So we do not think that we have a CPK issue. As we mentioned, there's a data safety monitoring board that's overseeing the RA study. They've not raised any red flags at all in terms of the prosecution of the study. So I think we're in good shape. Moving on to the atopic dermatitis enrollment question. We've been following the space and lots of other companies have experienced the same things that we have. It's a little ironic for people who live in the west part of the country because we had a very, very snowy winter. But in the areas of the U.S. that we're doing the AD Phase 2b study, which is mostly in the Northeast and the Southeast, in fact, it was a very mild winter, and we and everybody else we're seeing slowed enrollment. We do think that expanding the enrollment criteria to mild is going to certainly enhance the uptick in terms of recruitment, and we're confident in terms of the time lines that we issued today. We don't have data. The Phase 2a study was done in moderate to severe atopic dermatitis. We believe a drug is going to work very effectively in those mild patients and we'll look forward to see the results in the second half of this year. And then lastly, regarding ulcerative colitis. That was a very nice deal for Merck and Prometheus and I think they have some interesting data in UC. But my experience is you don't ever kind of throw in the towel because there are other folks that are kind of hunting in the same area. We think that mechanistically ATI 238 looks very attractive in the indications that we're seeking UC initially and a whole bunch of other T cell diseases subsequently, and we'll see how the market evolves. But if you look at the Prometheus deal and the Arena deal, with Pfizer. There's an awful lot of people investing in IBD, and we think that we're going to be very competitive in that space.

Q: Yeah, good morning, everyone. You alluded to this a little bit on the prepared remarks, but could you further contextualize how the CK elevations compare relative to other oral therapies that are approved and in development for the similar indications, including like the JAKs, TYK2s and TNF alphas. And then have you sought or received any feedback from KOLs regarding what's tolerable there? And then I have a follow-up.

A: Yeah, so let me start. First, nice to hear your voice, Corinne. So and Gail is going to elaborate in terms of the impact of CPK of other mechanisms in the INI space. But the CPK issue, for lack of a better word, in our clinical trials has been a bit of a nothingburger for investigators. So dermatologists and rheumatologists understand that asymptomatic CPK elevations are really nothing to worry about. Some have even asked us why it is that we're measuring them, but it's kind of standard procedure to do so. So we've seen zero concerns from clinicians that this is a clinically significant finding. Gail, do you want to elaborate about the CPK elevations with other mechanisms?

Q: Hey, guys . Good morning. Thanks for taking the questions. I guess, first on the HS study and the CNS adverse events, dizziness, headache, tremor. Do you have a sense for the etiology though these signals? And can you clarify if there were any discontinuations due to the CNS events?

A: Yes. Hey, Tom, Doug here. So in animal studies, at least, we do not believe our drug crosses the blood-brain barrier. So it is a little bit of an enigma to us, if there'd be any such symptoms. But I'll let Gail speak on ramification.

Q: Great. Thanks for taking the question and I appreciate all the details for the HS data. Maybe just one quick one. I know a lot of questions about the CPK and just anyone, hopefully, that's not too much for you. And in terms of the -- I understand this -- the CPK elevation transient and the kind of sales results, and it's very good, you don't have the symptoms associated. Just curious how long usually takes patients to develop any symptoms while they have some on and off for the CPK elevation? And how concerned we should be if you take the longer term therapy and they may have this kind of episodic elevation event? Thank you.

A: Yes. And so to date, we only have safety data in humans through week 12 in our program. We now with the chronic tox studies having been completed, we'll be able to dose beyond 12 weeks. But there's nothing in the profile of CPK that we're seeing to date that would suggest that there's going to be any long-term issues with it. It would be different if there was smoldering elevations at CPK through 12 weeks, then you might think that there's something chronic going on, but that isn't the profile that you're seeing at all here. So I think the likelihood is relatively low. But of course, let's do the studies and do the longer-term follow-up. Gail, anything you want to add on that?

Q: Thank you for taking the question and I appreciate all the details for the HS data. Maybe just one quick one. How do you see the competitive landscape shaping up in atopic dermatitis? And what do you consider to be the key differentiators for ATI-1777?

A: It's a great question. Thanks. The landscape, in fact, is getting more attractive. I think we've all been pleasantly surprised with the successful launch of the insight topical JAK. And by the way, that topical JAK is basically just the oral JAK that's been applied on the skin. So not surprisingly with it, you do see a fairly high level of systemic exposure, which I think is why the FDA opted to give them the class labeling with the black box, so the number one area of differentiation that we're seeking with our soft topical JAK program is to have similar, if not better, efficacy to Opsilura, but with minimal systemic exposure and thus a significant decreased likelihood of us getting the class labeling. We don't know what's going to be in the label until we have the label in discussions with the U.S. FDA, and that will be based on finalized Phase 3 data. But just if you look at what we have from our Phase 2a study, there are minimal de minimis exposure seen in patients, I think, is tracking well to the asset profile that we're trying to achieve.

Q: Hi. Good morning. Thank you for taking my questions. First, on the HS data, while it wasn't the primary endpoint, I'm curious if you could comment on what the placebo rate of high score 50, 75 and 100 were, and then on the topical JAK ATI-1777, just curious if you could talk more about the specific changes to the inclusion criteria behind that protocol? And then how much would you expect this to affect baseline characteristics for the overall study population.

A: Yes. So we're not going into a lot of more details regarding the results for HS. Suffice it to say that placebo had a very good day on basically every endpoint. In fact, placebo did better in this study than active did in some of the more successful Phase 3 studies that have already been published. Atopic dermatitis, do you want to comment about that?

Q: Hey. This is Lachlan on for Tim. Thanks for taking the question. A quick follow-up on the enrollment for atopic dermatitis. Are you limiting the proportion of patients in the trial that could fall into that sort of new milder cohort. If you could just talk about that. And then Gail, on the CK elevations, you mentioned a lot of them seem to be associated with exercise. So I'm wondering in the RA and PSA studies are there any sort of limitations or restrictions on things like patients exercising before a visit.

A: Gail will take both of those.